On February 10, 2014, in Dasher v. RBC Bank, the US Court of Appeals for the Eleventh Circuit held that a contract that entirely supersedes a previous agreement negates the previous agreement's arbitration clause, even if the new agreement is silent on arbitration. Whether or not the old agreement has been superseded and a valid arbitration agreement is in effect are questions of state law, and the presumption in favor of arbitration created by the Federal Arbitration Act (FAA) does not apply (No. 13-10757, (11th Cir. Feb. 10, 2014)).

Plaintiff Michael Dasher sued RBC Bank (RBC) in the US District Court for the Southern District of Florida for charging excessive overdraft fees. The action was part of a larger Checking Account Overdraft Multidistrict Litigation. RBC initially had an agreement with Dasher containing an arbitration clause which covered the overdraft fee dispute (RBC Agreement). However, while the litigation was pending and the parties were arguing over RBC's motion to compel arbitration, PNC Financial Services Group, Inc. (PNC) acquired RBC, giving PNC possession of Dasher's account. In connection with the acquisition, PNC issued an account agreement with Dasher that did not have an arbitration provision (PNC Agreement), which Dasher accepted. During the subsequent arguments on RBC's motion to compel arbitration, the parties disputed whether the RBC Agreement or the PNC Agreement controlled. The district court concluded that the PNC Agreement entirely superseded the RBC Agreement. Finding no evidence that the parties agreed to arbitration in the PNC Agreement, the district court denied the motion to compel. RBC appealed.

The Eleventh Circuit affirmed. Among other things, the court held that an entirely superseding agreement that is silent as to arbitration renders a prior agreement's arbitration clause ineffective. Further, the threshold determination of whether a new agreement entirely supersedes a prior agreement and whether an agreement to arbitrate has been made at all are strictly matters of state contract law. As a result, the FAA's presumption in favor of arbitration does not apply. If a subsequent agreement does supersede a prior agreement, the question becomes whether the subsequent agreement alone supports a motion to compel arbitration, and this determination is also made under state law without regard to the FAA's presumption.

Applying state law contract principles, the court found the PNC Agreement completely replaced the RBC Agreement, and therefore there was no arbitration clause governing the dispute. In reaching this conclusion, the circuit court distinguished cases in which a prior agreement remains in effect to some extent from the current case in which the prior agreement was entirely superseded. The circuit court also noted that the terms of the PNC Agreement stated that it superseded all prior versions and governed "at all times." As a result, according to its terms, the superseding PNC agreement governed the dispute even though the facts giving rise to it occurred in the past.

The Eleventh Circuit joined the US Court of Appeals for the Second and Sixth Circuits in holding that when an entirely superseding agreement is silent on arbitration, arbitration cannot be compelled even if a prior agreement contained an arbitration clause (Applied Energetics, Inc. v. NewOak Capital Markets, LLC, 645 F.3d 522, 524-25 (2d Cir. 2011); Dottore v. Huntington Nat'l Bank, No. 09-2636, , at *4 (S.D. Ohio Sept. 28, 2010), aff'd 480 App'x 351 (6th Cir. 2012)).

Where a new agreement without an arbitration clause completely supersedes a prior agreement containing such a clause, counsel should be aware that the right to arbitrate may be extinguished. The issue of whether an agreement to arbitrate has been made will be governed by state law, without regard to the FAA's presumption in favor of arbitration.